When Do I Pay the Deposit to the Real Estate Agent in NSW?
Paying the initial deposit does not take the house off the market. Only exchange of contracts does that. Here’s what gets paid, when, and what actually secures the property.
When do you pay the deposit to the real estate agent in NSW?
The initial deposit, usually 0.25% of the price and sometimes more, is paid as part of the “exchange of contracts” process. It can be paid as soon as your offer is accepted. Until contracts are exchanged, the law treats that money as an expression of interest deposit, and you get a full refund if you withdraw your offer before exchange. Paying it does not take the house off the market on its own. Here’s a simple breakdown of what gets paid, and when.
At a glance
- Does paying a deposit take the house off the market? No. Only exchange of contracts does that.
- Why pay the initial deposit early? It’s one of the two things needed before contracts can exchange.
- What do buyers get after exchange? A 5 business day cooling-off period to finish inspections and a contract review.
- What happens if you pull out during cooling-off? The seller keeps the 0.25% initial deposit as compensation.
What buyers think
“I’ve paid a deposit, so the house is off the market.”
What actually happens
It isn’t. The seller can still accept a higher offer from someone else. Until contracts are exchanged, you have no legal claim on the property.
There’s no such thing as a holding deposit
Before contracts are exchanged, an agent will often ask you to pay 0.25% of the price and call it a holding deposit. There’s no such thing. You can’t lay-by a house. The law calls it an expression of interest deposit. It’s refundable, and it becomes part of your initial deposit once contracts are exchanged. Buyers who hear the word deposit often assume the property is now theirs to lose. It isn’t. Until contracts are exchanged, another buyer can come in over the top of you and the seller is free to accept.
Before I explain why it’s still worth paying early, here’s what you as the buyer should be aiming for. The goal is exchange of contracts:
- That’s when the house comes off the market.
- That’s when no one else can make an offer on the property.
- That’s why exchange is so important, and why the days before it are the risky ones.
In plain English
Paying the initial deposit early does not reserve the property for you. It simply ticks off one of the two things that must be in place before contracts can be exchanged, so nothing holds up the moment that actually secures the property.
What has to happen before contracts can be exchanged
Two things, and that’s why we encourage buyers to pay the initial deposit early so the process isn’t held up.
The initial deposit is paid to the agent
- Usually 0.25% of the purchase price, sometimes more.
- Paying it early keeps the path to exchange clear.
The contract is signed by both the buyer and the seller
- Have it reviewed before you sign, or exchange with a cooling-off period and have it reviewed during cooling-off. The second option takes the property off the market sooner.
- Once both sides sign and swap, the deal is legally binding.
The balance of the deposit: paid on exchange or before the cooling-off period ends
The balance of the deposit is paid when contracts are exchanged, or before the cooling-off period expires.
In NSW, the full deposit is typically 10% of the purchase price. If you only have a 5% deposit, speak to us before you sign anything. The seller has to agree to the smaller deposit, usually through a special condition in the contract, and it isn’t a given.
The deposit is paid to the agent, or sometimes to the seller’s solicitor or conveyancer in a private sale, who holds it in a trust account rather than their own bank account until settlement. It can’t be released to the seller until settlement occurs or certain conditions are met.
“Paying the agent early doesn’t reserve the property. Exchanging contracts does. That’s the moment nobody else can make an offer.”
What about the cooling-off period?
If you’re buying a residential property in NSW, not at auction, you generally have a 5 business day cooling-off period after exchange. If you change your mind during this window, you can pull out, but you’ll forfeit 0.25% of the purchase price to the seller. If you paid the full 10% deposit, the rest (9.75%) is refunded to you. You do not lose the full 10% during the cooling-off period.
Once the cooling-off period ends, or if you’ve waived it, or you’re buying at auction where there’s no cooling-off at all, the deposit becomes non-refundable if you fail to complete the purchase without a valid legal reason.
Your deposit sits in a trust account until settlement. It isn’t the seller’s money yet.
A quick example
Purchase price. $800,000 with a standard 10% deposit.
Initial deposit. $2,000, being 0.25%, paid to the agent so contracts can exchange.
Full deposit. $80,000 in total, held in the agent’s trust account.
If you cool off within 5 business days. You forfeit $2,000 and get the remaining $78,000 back.
Why it pays to have a conveyancer involved early
The exact deposit amount, whether the cooling-off period applies, and how the trust account works can all shift depending on your contract terms. Having a conveyancer review the contract, either before you exchange or during the cooling-off period, means you know exactly what you’re committing to, and can often negotiate a smaller deposit or better terms.
About to exchange?
Send Justin, Julie, Amanda or Nicole the contract before you sign. We’ll tell you exactly what your deposit terms mean.
